DECODING THE PMLA IN A VIRTUAL ECONOMY: ADDRESSING THE ILLEGAL USE OF BITCOIN UNDER THE PREVENTION OF MONEY LAUNDERING ACT, 2002

AUTHOR – THAMARAISELVI T* & MS.T.VAISHALI**

* STUDENT AT THE TAMILNADU DR. AMBEDKAR LAW UNIVERSITY

** ASSISTANT PROFESSOR, DEPARTMENT OF CRIMINAL LAW AND CRIMINAL JUSTICE ADMINISTRATION, SOEL, TNDALU

BEST CITATION – THAMARAISELVI T & MS.T.VAISHALI, “THE CONSTITUTIONAL BALANCE BETWEEN THE INSOLVENCY AND BANKRUPTCY CODE (IBC) AND ARTICLE 14: A DOCTRINAL REVIEW”, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (1) OF 2026, PG. 689-704, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

This research looks at how the Prevention of Money Laundering Act 2002, in India’s being expanded. The Prevention of Money Laundering Act 2002 is being updated to deal with the growing financial system. The Prevention of Money Laundering Act 2002 needs to address the use of Bitcoin and other Virtual Digital Assets. This is an issue because people are using Bitcoin and Virtual Digital Assets in bad ways. The Prevention of Money Laundering Act 2002 has to be changed to stop this. The Virtual Digital Assets region is like a no man’s land. It is a place where the rulers’ not very clear. The Virtual Digital Assets region is now part of Indias rules to stop money laundering. This happened because of notes from the Ministry of Finance in March 2023. There were also guidelines from the Financial Intelligence Unit in January 2026. The Virtual Digital Assets region is now, under these rules. The guideline says that VDA service companies are called Reporting Entities. This means they have to follow a lot of rules. They have to do -layer KYC and Enhanced Due Diligence for big transactions that are very risky. They also have to follow the Travel Rule so that everyone can see what is happening with money being sent across borders.

The Directorate of Enforcement has taken a lot of money from people who were doing things. Like the ₹1,646 crore they got back from BitConnect.. It is still very hard for them to catch people who are doing bad things because they use things, like mixers and tumblers to hide what they are doing. There is also a problem because even when they do catch people and take their money it is hard to actually convict them in court. VDA service companies have to deal with this all the time. For all these challenges, India’s 2024 Financial Action Task Force (FATF) Mutual Evaluation rating of “Largely Compliant” for Recommendation 15 illustrates how the kingdom has actually raised its crypto oversight game to conform with global standards re: combatting monetary crime.

KEYWORDS Virtual Digital Assets (VDA), Bitcoin, Money Laundering, PMLA, 2002, FIU-IND, AML/CFT Compliance, FATF Mutual Evaluation 2024, Enforcement Directorate (ED), Travel Rule, Crypto-mixers/Tumblers.